Baidu.com recalls dotcom mania as shares soar 250%

By Andrei Postelnicu in New York and Chris Nuttall in San,Francisco
Published: August 6 2005 03:00 | Last updated: August 6 2005 03:00

Shares in Baidu.com - "China's Google" - shot up more than 250 per cent in New York yesterday, in one of the most spectacular stock market debuts since the height of the dotcom mania of the late 1990s.

At the initial public offering price, Baidu's American depositary receipts were offered at 540 times historical earnings. Google, which owns a 2.6 per cent stake in Baidu, trades at about 74 times earnings.

But by midsession in New York yesterday, the stock was up 255.3 per cent at $95.94, slightly below intra-day highs.

The Chinese company made about $5.2m (£2.9m) in revenues in the first quarter of this year and $13.4m during all of last year, according to regulatory filings.

Its shares had been priced at $27 each late on Thursday, above an already revised range of $23 to $25 a share, giving a market valuation before trading of about $872m.

The pricing yielded almost $110m in proceeds for the five-year-old company, which is China's first pure-play search engine to go public in the US.

Baidu - the name comes from an ancient poem about a man seeking love - also increased the number of shares on offer to 4.04m, or 12.5 per cent of its capital, from 3.7m.

China is the world's second-biggest internet market after the US and more than 100m Chinese now have web access. The number is expected to exceed the 185m US online users in the next few years.

The market's growth is driven by ever-wider access to broadband in urban centres and internet cafes springing up even in remote towns.

Shares in Sina and Sohu, other Nasdaq-listed Chinese inter-net companies, were mixed. Sohu added 1.5 per cent to $18.42 and Sina was 0.1 per cent lower at $29.

Another hot sector is online gaming, with China's Net-Ease.com this week announcing a 146 per cent year-on-year increase in gaming revenues.

Its shares rose 20 per cent on the news and analysts at PiperJaffray raised their revenue estimates to $200m for the 2005 financial year and to $302m for 2006.